FirstGroup has decided to hold the interim dividend at last year’s level until an inquiry into the flawed West Coast competition has been completed.
The rail operator announced today (November 7) underlying profit before tax for the first six months of the year to September 30 had fallen by 42.2 per cent to £48.7 million.
Statutory profit before tax has fallen by 93.4 per cent to £8.4 million.
FirstGroup had been awarded the West Coast Main Line franchise, but following a legal challenge by current holders Virgin the competition was cancelled, with the Department for Transport (DfT) citing serious flaws in the process.
That coupled with a freeze on other current rail franchise competitions has led the board to keep the interim dividend at last year’s level before considering an appropriate level for the full-year dividend in May 2013, FirstGroup have said.
FirstGroup’s chief executive Tim O’Toole said: “With fundamentally strong and diverse operations together with our improvement programmes, we are confident of achieving our goals to enhance performance and deliver improved growth and returns.
“The Group is in a period of transition and while there is significant work still to do, we are satisfied with the progress of the actions we have taken so far, though we remain cautious in respect of the continued economic weakness.
“In the short term we have to contend with the uncertainty around future rail franchises created by the Department for Transport’s (DfT) decision to cancel the InterCity West Coast contract and pause the current franchise competitions, following its discovery of flaws in the way it conducted its process. Prior to this we had been awarded the West Coast contract and were shortlisted for the remaining three current competitions, the outcomes of which would have been known by early summer 2013. As a result of this uncertainty, the board has decided to hold the interim dividend at last year’s level, and will consider the appropriate level for the full year dividend in May 2013, by which time the prospects for our rail division are expected to be clearer.
“As the UK’s largest rail operator, with approximately a quarter of the market and unrivalled expertise from a diverse portfolio, we remain committed to maintaining our leading position in the rail market and are actively engaging with the ongoing reviews to help shape the future of franchising.”